New Orleans inundated with water following Hurricane Katrina

As officials assess the damage from Hurricane Katrina in the central Gulf of Mexico coastline of the United States, economists are expressing concern the disaster could slow economic growth throughout the country. The southern Louisiana area, in particular, is an important center for oil and gas production as well as international grain shipping.

As Katrina approached the Gulf coast last week, oil and gas production companies shut down offshore platforms and moved people and equipment from many coastal sites as well. Now that the storm has passed, workers are having difficulty getting back into the affected areas to assess the damage.

Although not all offshore oil platforms were in the storm's direct path, companies shut down all but those farther west, on the Texas coastal area, as a precaution.

Bill Mintz, spokesman for the Houston-based Apache Corporation, says getting out over the water is difficult because normal airplane and helicopter services have been disrupted. Nonetheless, he says his company is working to restore operations as quickly as possible.

"At the present time, we are re-populating platforms in the area west of the storm track and we are starting to make damage assessments in the areas that were in the storm track and closer to the storm track," he said.

Mr. Mintz says even after workers can return to a closed down rig, they usually cannot get it back up and running right away.

"There are safety considerations and environmental considerations," he said. "It is not just a question of flying back out there and flipping a switch. There are procedures, there are things you need to do to get a field back in production, so it is going to take a while."

Frenzied oil trader at New York Mercantile Exchange yells during early trading, Tuesday, Aug. 30, 2005

Economists had been expecting a break in fuel prices as the summer holiday driving season comes to an end and demand slackens, but they now say prices are likely to move higher and stay high for at least several weeks. That could cut the economic growth rate by as much as three percent.

Dan Pickering, President of Houston's Pickering Energy Partners, says some big energy companies will see short-term gains from this disaster, but those directly affected by the storm may experience a setback.

"The financial impact for the producers is clearly a positive," he said. "We obviously have a run-up in both oil and gas prices. So, particularly for those companies that do not operate offshore, there is a nice windfall in higher commodity prices. In general, what it does, though, is put a strain on the whole energy infrastructure along the Gulf coast and that is going to take a number of weeks and, probably, months to recover from."

But Katrina's economic impact was not limited to energy production. Mr. Pickering says the closing of refineries in the area will have a big impact on transportation fuel costs.

"Gasoline prices are definitely headed higher," he said. "You have basically taken out about six percent of the U.S. refining capacity. There are about a million barrels a day in the New Orleans area that will probably be off for a couple of weeks from a combination of storm damage and power outages."

The Gulf of Mexico produces about two percent of the world's crude oil and accounts for about 25 percent of U.S.-produced crude. It is also a major production area for natural gas.

The closing of the port facilities in and around New Orleans will also have a negative impact on U.S. grain exports. Most of the grain from the American Midwest is transported down the Mississippi River to be loaded on ships for overseas delivery.

Spokesmen for large U.S. agricultural companies say it is still too early to assess how much impact the storm will have on their operations.

The port of southern Louisiana is considered the largest in the United States and fifth largest in the world, in terms of tonnage handled on a yearly basis.